Credit cards are not nearly as heavily used in Switzerland as they are in some countries, but most Swiss adults have at least one. Rewards credit cards like the Migros Cumulus Mastercard offered by Migros (Cembra Money Bank) and the Coop Supercardplus issued by Swisscard have found their way into many Swiss wallets. The uptake in online shopping and mobile payments is also driving up credit card use.
But aside from providing a more convenient way to make online payments, what do Swiss credit cards really give you? More importantly, how do the perks compare with those enjoyed by cardholders in other affluent countries?
When you compare Swiss credit cards to those issued in neighboring countries, differences seem insignificant. But what happens when you look a little further afield to countries like the U.S. or Singapore?
Here, the moneyland.ch team circumnavigates the globe to let you as a Swiss credit card holder know what you’re missing out on, both the good and the bad.
1. Interest rates
Credit cards are, after all, primarily about credit, so we’ve decided to look at interest rates first. In this playing field, Swiss credit cards look pretty good.
Switzerland: In Switzerland, credit cards are legally limited to maximum interest rate of 12% per annum at the moment. That means that you will never pay more than 12% interest on your credit card balance. Rather than charging interest based on creditworthiness. Swiss card issuers use a single interest rate for all holders of a certain card. The bad news is that most credit card issuers in Switzerland use the maximum interest rate, no matter how good your creditworthiness is. But there are cards that come with interest rates lower than 10%.
USA: Credit card interest rates in the U.S. are not as heavily regulated as those in Switzerland. Subsequently, you might end up with an interest rate as low as 6.99% or as high as 79.9%, depending on the issuer and your creditworthiness. The average credit card interest rate for cardholders carrying a balance was 12.89% in 2017, according to the Federal Reserve.
Singapore: If you think interest rates on Swiss credit cards are high, try carrying a balance in Singapore. The most favorable Singapore issuers charge 15% interest per annum, but the bulk of Singapore credit cards have interest rates between 24% to 26% per annum.
Many card providers, including some Swiss issuers, offer cash back, points or miles of some sort in order to encourage consumers to use their credit card to pay, rather than cash or debit cards.
Switzerland: You couldn’t be blamed for thinking that the idea of being rewarded for using a credit card has somehow passed Switzerland by. But we will let you be the judge. Take a look at the value you get from these highly popular Swiss rewards credit cards:
Migros Cumulus Mastercard: 1 Cumulus point for every 1 Swiss franc of purchases from Migros stores using your Cumulus credit card (1 point per 3 francs spent at other merchants). 500 Cumulus points can be redeemed for a 5-franc voucher which can be used to pay at Migros and at a number of partners. That’s the equivalent of 0.5% - 1% cash back. Of course, these savings only make sense for Migros customers. The Coop Supercardplus has a similar rewards rate.
TCS Mastercard Gold: 1% cash back on purchases, make this one of the most rewarding cash back credit cards available in Switzerland. The catch is that you have to be a TCS member to be eligible for this card, and that comes with its own set of costs. Plus, you pay a 100 Swiss franc annual fee to use this card, which detracts somewhat from its savings potential.
Swisscard Cashback credit card: This no-annual-fee credit card lets you earn 0.25% cash back on purchases.
USA: Americans have it good in the rewards department. US credit cards are some of the most rewarding in the world, and would make most Swiss rewards collectors turn green with envy. Here are a few examples of popular US rewards credit cards:
Citi Double Cash has no annual fee and lets you earn a flat rate of 2% unlimited cash back on all purchases. You earn 1% cash back when you make a purchase, plus another 1% cash back when you make your credit card payment. It has no annual fee.
Blue Cash Preferred Card from American Express has a US$ 95 annual fee but in exchange you get 6% cash back on the first US$ 6000 of annual purchases you make at all U.S. supermarkets plus unlimited 3% cash back at all U.S. gas stations and many major U.S. department stores. You earn a flat rate of 1% cash back on your other purchases.
“Discover it” is a cash back credit card issued by Discover, which owns the Diners Club network. It lets you earn 5% cash back on the first US$ 1500 you spend on purchases each quarter, in preset spending categories that change every 3 months. Categories include gas, restaurants, public transportation, home improvement stores, Amazon.com and more. You earn a flat rate of 1% cash back on all other purchases. This card has no annual fee.
Singapore: Rewards programs are very popular in Singapore, and Singaporean credit card issuers have come up with a number of interesting cash back credit cards. Here are some of the best:
UOB ONE. When you use this card from Singaporean bank UOB to spend S$ 500, S$ 1,000 or S$ 2,000 each month in a 3-month quarter, you get a cash back payout of S$ 50, S$ 100 or S$ 300 respectively for that quarter. That comes to 3.33% cash back on card spending of S$ 500 or S$ 1000 per month, and 5% cash back on card spending of S$ 2000 per month. That’s pretty sweet cash back, but you do pay an S$ 85.60 annual fee to use the card.
OCBC 365 Credit Card. This is one of the most popular credit cards in Singapore, and it’s easy to see why. Although it costs S$ 192.60 per year, you earn 6% cash back at restaurants, cafés, fast food outlets and other dining establishments on weekends, 3% at dining establishments on weekdays, 3% cash back at all supermarkets in Singapore, 5% cash back at gas stations, 3% cash back on telecoms bills, and if you have a child development account with OCBC, you also earn 3% on healthcare and dental spending. All other purchases earn a 0.3% flat rate. The maximum cash back you can earn is S$ 80 per month.
3. Annual Fees
Most Swiss credit cards have an annual fee which you have to pay every year in order to use the card. How do fees compare with those paid by other cardholders around the world?
Switzerland: A handful of credit cards are available for no annual fee (these are reviewed here). Most Swiss credit cards have annual fees of between 40 and 250 Swiss francs.
USA: Most top rewards, travel and balance transfer credit cards have no annual fee. Cards that do have annual fees generally offer a number of more exclusive benefits or higher rewards. However, the credit cards available to people with poor creditworthiness generally have annual fees.
Singapore: Credit card fees in Singapore match or even outdo those charged by Swiss issuers. A number of cards with no annual fee are available, but most cards have annual fees of between S$ 100 and S$ 200.
4. Foreign transaction fees
Swiss residents tend to travel outside of the country fairly regularly for leisure, business or in some cases even to do shopping. That makes foreign transaction fees a good source of revenue for credit card issuers.
Switzerland: With foreign transaction fees of 1.2% to 2%, depending on the issuer, Swiss cards are about average. However, the currency exchange rates used are often unfavorable. There are a handful of cards, like the Swiss Bankers Travel Cash Card, which do not charge a foreign transaction fee. Unfortunately, these are primarily prepaid cards which have low spending limits and charge you a fee when you add money to your card account. But it is worth noting that many Swiss banks also offer euro or U.S. dollar credit cards in addition to Swiss franc accounts. That means, if you travel to countries that use the euro or to the U.S., you can skip out on both the foreign transaction fee and the currency exchange markup by using Swiss foreign currency credit cards.
USA: The “no foreign transaction fee” fever that begun with issuers like Discover and Capital One seems to have spread to most other major issuers. Many of the best rewards and travel credit cards in the US now don’t charge a foreign transaction fee for purchases made in a foreign currency. The currency exchange spreads are set by the card network (Visa, Mastercard, American Express, Discover) and are generally favorable. Besides Capital One and Discover credit cards, this feature can now be found on many credit cards from Chase, American Express and Barclaycard, and the trend is growing. However, cards that do charge this fee typically have a foreign transaction fee of 2.5%.
Singapore: As in Switzerland, foreign transaction fees are the norm on Singaporean credit cards. They average foreign transaction fee is made up of 1.5% issuer fees, plus 1% in fees from the credit card network. But the Singapore arm of Malaysian bank CIMB is looking to change that. Several of their cards offer a rebate equivalent to any foreign transaction fees charged, so you get that money back as cash back. It is also worth noting that a handful of dual currency credit cards are available in SGD/CNY and SGD/USD combinations, so those who travel to China or to the U.S. often can avoid paying foreign transaction fees and spreads.
5. Bonus offers
Getting free airline tickets or hundreds of dollars of cash back just for using a credit card would sound like a joke to most Swiss consumers. But Americans and (to a lesser extent) Singaporeans, have been enjoying the benefits of welcome offers for a long time.
In case you don’t know what we are talking about, a welcome offer is a gift which a card issuer gives you when you sign up for their card. Welcome offers typically consist of rewards (points, miles, cashback), vouchers or merchandise.
Switzerland: A handful of credit cards in Switzerland now have welcome offers, which is great. While offers have gotten more generous in recent years, they still aren’t anything to write home about. The most outstanding are the welcome offers of between 5000 and 20,000 miles (depending on the card) when you apply for Miles and More credit cards from Swisscard and Cornèrcard.
USA: Card issuers in the U.S. have gone all out with their bonus offers. Although offers change regularly, it isn’t uncommon to get up to 60,000 frequent flyer miles, 80,000 hotel points, $250 cash back or 50,000 reward points when you successfully apply for a credit card. With some offers, you have to charge a set amount of purchases within the first few months in order to get the bonus, but the required spending is very reasonable. Applying for a few new credit cards can be enough to cover a vacation flight and hotel stay.
Singapore: Banks in Singapore don’t seem as desperate to lure customers as U.S. issuers, but they do offer some bonuses. In most cases these take the form of vouchers which can be redeemed at local merchants, but merchandise (a smart phone or tablet, for example) is also commonly offered to successful applicants.
6. Introductory interest rates
Because most Swiss do not carry a balance on their credit cards, Swiss issuers have been slow to add introductory interest rates as an incentive. Not so in the U.S. where introductory interest offers are the norm.
Switzerland: As of yet, Swiss issuers do not offer introductory interest rates at all. Right from the start, balances which you carry past the monthly due date are subject to the standard interest rate.
USA: The US is king of introductory interest offers, and most Americans expect to not pay interest on their balances for at least 6 months from the time their new credit card account is opened. Here are a few examples of the introductory interest offers available in the US:
Chase Slate has an introductory interest rate of 0% for the first 15 months after account opening. This applies both to purchases made with the card, and to balances you transfer to this account from your other credit card accounts. It also has a $0 introductory balance transfer fee for transfers made during the first 60 days after the account is opened, so you don’t pay an administrative fee to transfer your other card balances to this card account during that time.
Citi Simplicity Card has an introductory 0% interest rate for 21 months which applies to debt you transfer to this account when you first get the card. That gives you 21 months to pay off your credit card debts without being charged interest on them.
Singapore: Credit card issuers in Singapore are nowhere near as generous as US issuers when it comes to introductory interest rates. But some cards, particularly those from foreign banks like Citi and ANZ, do come with a lower introductory interest rate for a certain amount of time. This is typically somewhere around 18% interest per annum rather than the standard 25%.
Most credit cards offer perks that can make them a smart choice to use for certain types of purchases. These benefits may include complimentary travel insurance coverage, price matching, return protection and extended warranties.
Credit card companies and issuers often partner with retailers and travel merchants to offer you special privileges such as free extended hotel stays or instant discounts on purchases.
Some issuers go a step further and deliver lifestyle privileges like concierge services, free airport lounge access and exclusive access to events or restaurants without reservation.
Switzerland: In Switzerland, most of the benefits you get with a credit card are determined by the card issuer rather than by Visa, American Express, Mastercard or Diners Club. Most Swiss credit cards, even Basic (Silver) Visa cards and standard Mastercard cards, give you basic travel accident insurance, price protection and extended warranties when you use them to pay. Gold Visa or Mastercard cards may also include trip delay or cancellation insurance, luggage loss or delay insurance and purchase protection. Concierge services come with some mid-priced cards (like the Visa Libertycard Plus), and specialized benefits like the bicycle insurance which comes with the Visa Libertycard caters to the needs of Swiss consumers.
USA: In the U.S. most of the benefits you receive with your credit card are determined by the credit card network rather than your issuer. So the kind of benefits you get depend primarily on whether your card is a standard Visa card (auto rental collision damage waiver, zero liability for fraudulent purchases), a Visa Signature (extended warranty, concierge service, coverage against theft or accidental damage, lost luggage coverage, plus standard Visa benefits) a standard Mastercard (price matching, extended warranty), World Mastercard (concierge service, exclusive lifestyle and travel savings, plus standard Mastercard benefits) or World Elite Mastercard (trip cancellation insurance, exclusive World Elite travel and lifestyle savings, plus World Mastercard benefits).
American Express offers similar benefits to Visa and Mastercard while Discover offers more close-to-home benefits like free credit score access and a comprehensive deals program (Discover Deals).
The only area in which US cards out-benefit Swiss or Singapore credit cards is in the high-end, exclusive card arena. The Platinum Card from American Express, for example, brings a lot more value to US cardholders than it gives to its Swiss or Singaporean card members. Other benefit-laden cards like Citi Prestige don’t have a Swiss equivalent. US airline cards are also more beneficial than their Swiss counterparts and often entitle cardholders to free checked luggage and priority boarding.
Singapore: Credit card issuers in Singapore shower their cardholders with deals and promotions that give them discounts when they shop from local merchants (while encouraging them to spend more). Many Singapore credit cards come with insurance coverage that is only available on the most expensive US credit cards. Trip delay or interruption coverage, trip cancellation insurance, luggage insurance, and even emergency medical evacuation and overseas medical coverage are not uncommon. Airport lounge access and concierge services are offered by good travel cards.
As you’ve probably gathered from this comparison, Swiss credit cards don’t exactly shine alongside their foreign counterparts (no reference to the Swarovski-studded and rose-gold credit cards offered in Singapore intended).
Why do cardholders in other countries enjoy such high rewards and attractive welcome offers? The answer lies in the way credit cards are used in different countries.
Swiss consumers tend to use credit cards primarily as an alternative means of payment for certain types of transactions. Most Swiss cardholders make their payments in full by the due date and never carry a balance. On top of this, the interchange fees which issuers charge merchants when they process credit card transactions are legally limited to 0.44% of each transaction (as of August 2017).
Because of Swiss consumer behavior, card issuers in Switzerland especially profit off interchange fees, transaction fees (such as foreign transaction fees) and annual card fees.
On the contrary, Americans and Singaporeans often carry a credit card balance. U.S. consumers jointly carried more than US$ 1.28 trillion of revolving debt (primarily credit card debt) in 2017, according to the U.S. Federal Reserve Bank. Considering that the average U.S. credit card interest rate is over 13%, and some issuers use daily compounding, that US$ 1 trillion is raking in massive profits for U.S. card issuers.
Add to that the fact that U.S. merchants have to pay 2.10% plus US $0.10 for each Visa credit card payment they accept (this amount can be higher with other credit cards), and you get an idea of how US card issuers can afford to be so generous. It’s certainly in their best interest to convince as many consumers as possible to use credit cards.
Should Swiss credit card users be envious?
We would all love to earn the kind of rewards and bonus offers which U.S. card users enjoy. But it’s important to bear in mind that at the end of the day, the cost is passed on to you as a consumer.
Whether the extra cost of accepting credit card payments or paying you rewards is worked into the prices of goods and services or covered by interest payments on card debt, consumers are footing the bill.
Credit card comparison